In short
The episode covers a late-day market selloff after the Fed held rates unchanged, with bond yields surging (30-year highest since 2007) and the yield curve steepening. Hosts argue the Fed’s lack of forward guidance (Warsh) signals inflation-fighting may be delayed, pushing markets to price a possible September hike and/or balance-sheet action. They connect the move to “credit” signals: dollar down, gold up, and inflation expectations rising.
Key earnings drivers
Meta shares fall ~10% after an earnings miss, weaker Q3 revenue guidance, and a higher/lower CapEx range; Zuckerberg highlights AI improving ads and user experience and teases enterprise/API/compute-selling opportunities. Microsoft shares rise ~2% after Azure revenue grows 43% YoY (first $100B quarter) and Copilot paid seats exceed $30M.
Other notable movers
Qualcomm down on weaker handset demand; P&G down on soft fiscal 2027 outlook; Humana down despite beats; GE Healthcare up 12% on a clean bill; Chipotle and Starbucks up on strong same-store sales and raised guidance.
Guests
Tim Seymour, Karen Feinerman, Steve Grasso, Michael (Cantopoulos), and Michael Cantopoulos (Janus Henderson Investors, multi-asset macro). Also featured: Steve Leisman (D.C. Fed coverage), Julia Boorstin (Meta earnings), Kate Rooney (Microsoft earnings), Christina Parts Nevelis (Qualcomm), Tony Wong (T. Rowe Price, Science and Tech Fund).
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOMarket Overview
0:33 to 0:53
An initial look at the market's performance and major players.
“Every Mazda comes standard with proactive safety features.”
Market Overview
1:26 to 1:40
An initial look at the market's performance and major players.
“Plus, South Korean stocks sink for a fourth straight day.”
Fed's Decision and Market Reaction
1:40 to 4:24
Discussion on the Fed's decision to hold rates steady and market impact.
“On the desk tonight, Tim Seymour, Karen Feinerman, Steve Grasso, and Michael Cantopoulos, head of multi-asset macro investing at Janice Henderson Investors.”
Analysis of Fed Communications
4:24 to 7:10
Experts analyze Fed Chairman Kevin Warsh's communication and market response.
“I feel like you squinted real hard in that thought, Steve.”
Earnings Report Dissection
7:10 to 11:28
Dissecting earnings reports, particularly Microsoft's and Meta's results.
“Boy, you know, this is a really important earnings day.”
Market Implications of Meta's Earnings
11:28 to 14:01
Discussion on Meta's disappointing earnings and future guidance implications.
“They are at their after-hour session lows right now, down by almost 10 percent after the company missed earnings expectations.”
Impact of Rising Rates on Borrowing
14:01 to 17:26
Explore how rising rates affect borrowing and investment decisions for companies like Meta.
“So if they can either go to a more expensive debt market or they can go to a now very getting expensive, not very, but less favorable equity market for sure.”
Microsoft's Strong Cloud Growth
17:27 to 19:20
Discuss Microsoft's impressive cloud growth and financial performance amidst challenges.
“So Microsoft was helped by strong cloud growth in the quarter, a beat on the top line at least.”
Analysts' Reactions to Microsoft
19:21 to 21:41
Analysts evaluate Microsoft's earnings and future potential, focusing on cloud services and CapEx.
“I mean, you know, I don't know where they were they sandbagging those earlier numbers.”
Upcoming Earnings and Market Movements
21:42 to 22:32
Preview of upcoming earnings reports from Qualcomm, Chipotle, and Starbucks, and market reactions.
“I mean, all of that is on the back of massive CapEx.”
Show all 24 chapters
Qualcomm's Earnings and Market Outlook
24:06 to 28:19
Analyzing Qualcomm's latest earnings results and strategic shifts amid market challenges.
“We've got an earnings alert on Qualcomm.”
Market Reactions to Fed Decision
28:53 to 29:58
Learn how the Fed's decision impacted major stocks and earnings outlooks.
“Stocks sharply lower after today's Fed decision.”
Analyzing Earnings Reports
29:59 to 32:00
Explore insights on companies like Procter & Gamble and GE Healthcare.
“Yeah, I mean, I thought Procter was kind of a kind of a letdown when in this environment, if you see people trading down in staples, that's that's a problem.”
Tony Wong Discusses Meta's Performance
32:01 to 33:42
Hear insights from Tony Wong on Meta's earnings and future strategies.
“Taking a check on how we are doing in the after our session, MetaShare is down by about 9%, Microsoft up 2.5%.”
Investment Strategies in the Current Market
33:43 to 36:54
Delve into investment considerations amid changing market conditions.
“And I guess that's where I wanted to go.”
Evaluating Chip Stocks and Innovation
36:55 to 38:04
Understand the impact of innovation on chip stocks and market cycles.
“I mean, are you getting concerned that that that's turning?”
Earnings Highlights: Starbucks and Chipotle
38:05 to 41:20
Review what drove earnings growth for Starbucks and Chipotle.
“When you put it all together and shake it all up, Michael, what do you get?”
Debating Market Trends and Opportunities
41:21 to 42:00
Discuss market trends and potential buying opportunities in tech.
“And I'll talk about Starbucks because I think those same-store sales are fantastic.”
Starbucks vs. CMG: A Turnaround Story
42:00 to 42:58
Discussion on the performance of Starbucks and CMG in the current market.
“I mean, it's not like they're not a mature company.”
South Korea's Market Challenges
42:58 to 43:12
Introduction to South Korea's market struggles and upcoming earnings reports.
Analyzing the KOSPI and Chip Market
43:12 to 45:34
In-depth analysis of the KOSPI drop and implications for chip stocks.
“Concerns over the AI trade sparking a sell-off in South Korea.”
Navigating Mechanical Selling
45:34 to 45:58
Exploration of the effects of mechanical selling on market dynamics.
“To your point, the mechanical selling really cuts both ways.”
Final Trades: Market Predictions
45:58 to 46:46
Hosts share their final trades and market predictions.
“We think policy support is going to be there, and it's pretty cheap.”
Final Trades: Market Predictions
47:24 to 47:54
Hosts share their final trades and market predictions.
“Hey, Chicagoland, the Wayfair store is in your neighborhood at Edens Plaza and Wilmette.”
Transcript
Automatic transcript. May contain errors.0:00Warsh:Say you always wanted to have a backyard oasis. Here's the thing. If you get smart with your money, you can do things like that. With Empower, you can start making the most out of your money so you can go out and live a little. Isn't that why we work so hard? To have some fun with our money? Like treating yourself to something special or spontaneously doing something extra for a loved one. So use Empower and get good at money so you can be a little bad. Join their 20 million customers today at Empower.com. Not an Empower client paid or sponsored. Mazda has been named Consumer Reports' safest new car brand.
0:36Warsh:It starts with our approach. Every Mazda comes standard with proactive safety features. So you're more aware of what's around you, more focused on the road ahead, and ready before problems ever start. Mazda. More of what matters most to you. Go to mazdausa.com to learn more.
0:56Tony Wang:Consumer Reports does not endorse or promote any product.
1:25Tony Wang:money. Plus, South Korean stocks sink for a fourth straight day. Procter & Gamble misses revenue expectations and healthy gains for GE Healthcare. What's got the stocks surging to three-month highs? Get the details. I'm Melissa Lee. Come to you, Laugh, from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Feinerman, Steve Grasso, and Michael Cantopoulos, head of multi-asset macro investing at Janice Henderson Investors. Michael, welcome. Some big names in tonight's earnings with Microsoft and Meta moving in opposite directions. We'll get you those numbers in just a moment. But we start off with a late day sell off on the street that sent stocks tumbling.
1:59Tony Wang:The Dow leading the loss is shedding more than 1100 points. It was its worst percentage loss since April of last year. The Nasdaq down nearly 2 percent now officially in correction. And S &P also dropping. The moves coming after the Fed held rates steady at its latest meeting, sparking fears the central bank may not be doing enough to combat inflation. Take a look at the rate reaction. 30-year Treasury hitting its highest yield level since 2007. The 10-year also sharply higher. The two-year dropped. That had the yield curve steepening sharply with the spread between short and long-term Treasuries spiking midday.
2:33Tony Wang:For more on what we learned today, let's turn to Steve Leisman in D.C. Certainly the markets didn't like any of it. Steve.
2:39Warsh:I think it's an objective observation to make, Melissa, that neither the long end of the bond market nor the stock market reacted favorably to the Fed's decision today are the comments made by Fed Chairman Kevin Warsh. Some suggesting the market reaction, a thumbs down on Warsh's commitment to fighting inflation. The long end, as you just said, getting killed. Here's the chart, the yield on the 30-year. It is the high, surging 10, 12, 11 basis points for a massive. At 5.22, it hit the highest yield since 2007. 2.10 spread. Jeffrey Gunnlach pointed this out to Scott Wapner. Steepened, undoing the flattening from the last press conference.
3:13Warsh:Markets now expect a hike in September, but less than they did from the far of the meeting. 69 % probably for a hike, 31 % for a hold. We're subtly hinting a hike could be coming, but listen carefully. So I think it's a mischaracterization to say that markets haven't reacted because we didn't move today. Markets are reacting in real time. In the period ahead, we've got important decisions to make about the policy rate. Markets in the intervening period, I think, have quite a bit of decisions to make. And the 9-3 vote included dissents from Beth Hammack of Cleveland, Neal Kaskari of Minneapolis, Laura Logan of Dallas.
3:50Warsh:They could be pointing the way to where policy is going. But the question is why the rate hike didn't happen at this meeting with the chair constantly promising price stability and getting back to the 2 % target. Mark Spindell from Potomac River Fund telling me the reaction to the long end of inflation expectations of gold all during the press reveals a market questioning the chairman's resolve. He's had two opportunities to raise rates and hasn't even as the market builds in expectations for rate hikes. Hike may be coming, but the problem is Borsh's failure to answer basic questions about what he's thinking, why it makes it difficult to predict, and at some point raises the question about whether he will act and why.
4:23Warsh:Melissa?
4:24Tony Wang:I feel like you squinted real hard in that thought, Steve. I mean, this is like the second or third time I've listened to that same thought, and I didn't necessarily hear that a rate hike was coming from that. How did you get that message?
4:36Warsh:It's the more work to do, that we have more work to do, and the market has more work to do. There's another similar statement like that where he says that this pause or this today is just the beginning of a process. So that kind of said maybe it's coming down the road and maybe he wants to play for a little time here. But what we're seeing from the market, at least the initial reaction, they could decide differently tomorrow morning. That's always the potential case. But the initial reaction is the market wanted some sense of either action or a sense of how the Fed would react. And you just can't get a drop from it.
5:14Warsh:It's like, you know, the old blood from a stone adage. Yeah, Steve. Hey, it's Mike Antopoulos here. Yeah, I appreciate that view. The one thing I'm trying to reconcile is what the Fed's reaction function is to the market. I mean, he didn't really give a straight answer. Right. He mentioned how real rates are up, how the market is essentially tightening financial conditions for them. So how attuned do you think the Fed is to what the Treasury market's doing? And do you think it will impact what they do at the next meeting? Well, Mike, thank you for affirming my confusion and lack of understanding of what happened today, because sometimes you feel a little bit alone out there.
5:49Warsh:But as I said in the last hour, I never listened so hard and heard so little. My my my question was exactly what you're asking. My question to Warsh was, hey, you told us to listen to the markets or that you're listening and watching the markets. What are the markets telling you? So if you're not going to tell us your reaction function relative to the data, then tell us your reaction function relative to the markets that you just told us are now unfiltered or untainted by the Fed forward guidance. And to me, the answer would have should normally have been, well, the two year is trading 70 bps above the Fed funds rate.
6:24Warsh:That's telling me market should be higher. You also, by the way, had a rise in the tip spreads today. It told you that the market is concerned about inflation. And then look at the 30-year. The 30, if you look at intraday, I mean, that is some kind of blood on the street on that particular trade, you know. That's 11, 12 basis points right now. And then that's telling you the market wants something done here. But even in the absence of doing something, a clear explanation of the road ahead. And there was even some, I would say, some unusual. And I've been in those press conferences at the very beginning since 2011.
7:01Warsh:I would say some unusual frustration on the part of reporters there.
7:05Tony Wang:Should be interesting months ahead. Steve, thank you.
7:09Warsh:Pleasure.
7:09Tony Wang:Steve Leisman. So we definitely saw market react. What did the markets tell you, Tim?
7:15Warsh:Boy, you know, this is a really important earnings day. But as we like to do, we hit the most important story. I mean, this is a massive story because, first of all, let's just underline what we've been saying. New paradigm fed, less detail. And it would be a mistake to interpret the lack of forward guidance that actually things are more benign for September. In fact, if anything, I think it does set us up for fear in September. But the market interpretation was look at how the dollar dove. Look how gold rose. You know, so when you have yields back up and the dollar dives, it's basically saying the Fed's behind the curve.
7:47Warsh:And actually, it's more of a credit response as opposed to, you know, if the dollar rallied, it would be, hey, the Fed is front forward. We're going after it. And actually, we're chasing inflation. I would also just say that Warsh's two tools that he's talked about, the fact that he didn't move on interest rates means to me he has to move on the balance sheet. And the balance sheet has really grown. And I think this is something we're going to hear a lot more about in the next couple of days. So it was confusing, to be sure. But the thing that I found interesting talking to Andy Constant about this was he was telling you loud and clear over and over.
8:19Warsh:I'm happy with the long end being higher. It's doing the work for me. It's going to this will this will help inflation. Right. If he had done the opposite and the long end loved that because, oh, he's addressing inflation. That may not have that may have been counterproductive. This is look, you know, this is a long time it's been coming. for us to unwind this. And it's not going to be easy, but the market is doing it for us. And so it sounds to me like that's the way he's going to continue. And for us to wait for this, you know, these small little issues of does he hike, does he not, isn't really where he's going.
8:59Warsh:The balance sheet, to your point about balance sheet,
9:01Tony Wang:you know, that's important as well. We'll see what they do with balance sheet. Right. To that point, in terms of the market doing it for him, I mean, the market, the 10-year yield is basically up of one hike since the last Fed meeting. So, yeah, we're seeing that in action.
9:15Warsh:So I think he wants what Karen is talking about. He wants the market to do it around him. And he wants us to figure it out without the Fed holding our hand. So we went from sipping from a wire hose, a wire hose, a fire hose, to getting nothing, not even a trickle of information. So I get that we're not getting any information. But what could he do for inflation. History shows us that 75 basis point hikes are 0.1 percent influence on inflation when it's due to a supply shock, not a demand pull. So there's very few things the Fed can do when the Fed didn't cause this.
9:53Tony Wang:What do you think?
9:54Warsh:So I think I think the market is starting to lose today. We'll see what happens tomorrow. We're starting to lose a little bit of faith. You know, I think growth and inflation is high. The Fed is not addressing that higher growth and inflation. That's why the long end sold off. That's why the two year did nothing. Listen, this is a bear steepening on the back of strong growth. And I think at some point the Fed's going to have to address that.
10:19Tony Wang:To be fair, though, he has a committee. It's not just him saying, waving the wand, saying, I'm going to hike rates. I mean, it was nine to three. That would have been a lot of convincing on the part of Kevin, even if that's what he wanted to happen. So how can we actually say we're losing faith in him?
10:35Warsh:Well, I think that's a fair point. I think there's a reaction that the market's losing faith in the committee or the reaction function of the committee. I think it's not individual. I would agree with that. OK. Well, I think it's an important day for, again, a lot of reasons. But ultimately, the fact that the market closed on the lows, the S &P, which was holding out and broke through the 50, and the response to that rates could go higher. And I think, again, the market is trying to push the Fed. Whatever we're saying is his tactic here. There's no question that this is a market day. And it's a day when you started to see some of those names that have been defensive give some ground.
11:10Warsh:And if there's interest rate sensitivity out there, equities are not priced for it. There's no question about it. And this is a case where that upward move in yields has been going on for, I understand, we could say over two years yields have done nothing. But I could say from October we have an uptrend in terms of where interest rates are going. And I think it's the path of least resistance.
11:30Tony Wang:We do want to get to Metashares. They are at their after-hour session lows right now, down by almost 10 percent after the company missed earnings expectations. The social media giant also delivering disappointing revenue guidance and narrowing its CapEx spend for the year by raising the bottom end of the range. The call is underway right now. Julia Borson's got those numbers. Julia.
11:47Warsh:Yeah, a number of factors here, Melissa. As you mentioned, shares trading lower on the company, raising the lower end of its CapEx range for the year. Third quarter revenue guidance below expectations and an earnings miss. Now, on the earnings call just now, CEO Mark Zuckerberg saying that AI is improving the user experience and ad performance, saying it's also creating new potential revenue streams. Zuckerberg saying, quote, we see a large enterprise opportunity to sell to businesses, including APIs, business agents, potentially selling compute directly and other services that we're building for large customers.
12:21Warsh:He also said in response to a question just now, we believe that there will continue to be a significantly higher margin on selling intelligence rather than selling compute directly. We think that there is a big opportunity, obviously, to sell compute as well. Zuckerberg going into some detail about how they are going to be offering several pricing options and tiers for their MetaOne subscription offering, sharing some bullish commentary about the glasses as well. But the stock does not seem to like this call. Shares now trading down over 10 percent.
12:52Tony Wang:Melissa, do we have an understanding yet, Julia, as to how Meta is viewing selling excess compute, whether this is of a sustainable business or if this is just sort of an opportunistic thing to do at this moment in time? Seems like it's way too early to weigh in on that, Melissa. I mean, they haven't shared their plans around this at all.
13:12Warsh:There's so many different ways they could do this. Zuckerberg saying they do believe they will use the majority of the capacity themselves, but that there is this opportunity for the excess capacity. So he's teased ahead that they're going to be sharing more details. And I think that's when we'll get a sense of whether this could really be a long term, meaningful new revenue stream for the company.
13:31Tony Wang:All right, Julia, continue to keep us posted, please. Julia Boorstin on Meta, those shares are down in excess of 10 percent right now. Karen, what'd you make of this quarter and the sell off?
13:40Warsh:So the quarter was fine, but that has nothing to do with this, really. So, you know, in the business of what used to be their main business. Right. So Family Daily Act was down a little bit. But, you know, it was fine. But that's not the point. The point is the CapEx number is disappointing. I guess it's better than how they raise them more as opposed to just being sort of in the range. But just, you know, looking at what happened to the bond market early. Everything just got more expensive. Right. So if they can either go to a more expensive debt market or they can go to a now very getting expensive, not very, but less favorable equity market for sure.
14:17Warsh:So that sort of I don't know if that should slow the wheels down, maybe not just for Meta, more broadly. For anybody who has to borrow. Right. Who has to borrow. So if that ends up slowly, I actually think the best thing they could have reported is we're slowing things down materially. For the stock. Right. Now, maybe they would say no, not for the longer, longer business. I don't know how. I mean, the street is really, you know, very disappointed. I don't know how much longer it can be sort of given a pass. This isn't even a pass. This is I mean, down 10 percent. That's significant. It is very significant, particularly where it's come from before.
14:56Tony Wang:I mean, the timing of it in terms of the reports about, you know, the most recent balance bond sale having to be priced, you know, above what it had priced the Hyperion deal. And then you have this uptick in rates here. And then you had BlackRock doing most of the debt. Yeah. Yes.
15:15Warsh:So, yeah, this is, you know, as a meta holder, it's self-hedging in that it's less now. But this is now my fourth or fifth position where it used to be first. It used to be a cash cow. It used to be great. Different story. You'll curve steepening, not helping the hyperscaler spent and and tightening the bottom end of the range. But are they selling capacity? Are they selling over capacity? Right. I mean, I just wonder, you know, when I hear that, I what's too bad is that we miss out on a 28 percent ad growth, which makes them far and away the best and the fastest growing. And their core business is kind of exciting right now.
Read the full transcript
15:57Warsh:But I do think it's something to be concerned. I also just think the regulatory issues were flagged as being something that had material chance to spike. I know we never have we typically have never worried about the regulatory framework for Google or for Meta, especially around the world when they're getting fined this and that. But some of these lawsuits in terms of the youth dynamic that at least is and they communicated them. I realize they have to get out there and talk about them. So I think there's there's a fair amount here. Note, by the way, trades right down to five 20, which is that March 27 low.
16:31Warsh:We'll see where we hold. But that's a key level. There's no diversifying away from the core business. They make 98 percent of their revenues from ads. So to diversify is is nothing. It's incremental. They're spending too much money. They have to have sort of a pseudo year of efficiency. but maybe a quarter of efficiency.
16:48Tony Wang:How should we think about the impact of rising yields on the financing of these projects?
16:52Warsh:I think it's a huge factor. You know, listen, the earlier debt offering you saw earlier this week was only 1.7 times oversubscribed. That's like nothing in the bond world. They were five times. Four or five times earlier in the year. Listen, higher yields affect the multiple, affects debt sales. You know, I don't think this is a good environment for the hyperscalers at the moment.
17:14Tony Wang:Let's get to Microsoft here. The shares are higher by almost 2 % after hours. The company's Azure cloud business grew revenue 43 % year on year. The call kicks off in just about five minutes, 15 minutes time. Kate Rooney's got the report there. Kate. Hey, Melissa. So Microsoft was helped by strong cloud growth in the quarter, a beat on the top line at least. When you look at total revenue, that was up 18 % from a year ago. EPS was a little bit messier. We're not going to compare that number. It did notch at$3.2 billion gain from its stake in AI giant Anthropic. And it is also OpenAI's largest shareholder, 7-cent gain from its stake in that company.
17:49Tony Wang:Azure Revenue, though, that growth was better than expected. That was the key number to watch, 43 % growth in the cloud business. And it passed$100 billion in revenue for the first time. Copilot, also a bright spot, paid seats there, passed$30 million. If you look back, Q2, it was around$20 million, Q3, rather, fiscal year. So that was$20 million. Meaningful jump there. CEO Satya Nadella said in the press release, this reflects some confidence that customers are now placing in Microsoft to power their AI transformation. The productivity and business segment, too. So think of Office. LinkedIn saw a 14 percent jump in revenue growth, also lower than expected costs for Microsoft, thanks to its first ever voluntary retirement program.
18:30Tony Wang:Xbox revenue did decline about 10 percent. We do expect to get a bit more clarity on this entire CapEx discussion on the call coming up soon, Mel. All right. Thank you, Kate. Kate Rooney. And we have to keep in mind that we still we don't have any guidance from Microsoft. So this happens every single quarter where the stock is moving in a certain direction. Conference call gets underway and it could be a completely different story, you know, in a half hour's time. But still, here we are. CapEx looks at this point to be exactly what they said it was going to be. No raise. And for now, that's good.
18:59Tony Wang:And Azure's better than expected.
19:01Warsh:So, yeah, I think this was even better than the whisper number on Azure, which was kind of 41 ish, 40 to 41. So I think it's important. I think it's going to be important for them to show that the operating free cash flow comes actually is free cash flow. In other words, they come in on the positive side. They were negative last quarter. I think people want to hear that copilot. I mean, you know, I don't know where they were they sandbagging those earlier numbers. I mean, that's huge, huge growth in a short amount of time. And I think let's just bring it back to the Apple story, which is it. Apple hasn't been spending like a drunken sailor that maybe Microsoft could be accused of.
19:37Warsh:But you can make an argument that ultimately it's Microsoft's platform with enterprise and essentially in the retail community to own it. And that and that copilot eventually will be something that has to be reckoned with. So I think that kind of growth tells you that Microsoft, because of who they are, is still very well positioned.
19:56Tony Wang:Yeah. Quarter on quarter, it's up 10 million, more than 10 million paid seats. 50 percent. Right. And then from the previous, it was 15. We were ridiculing Microsoft for 15. It's hockey stick time.
20:06Warsh:But we still don't know what the seed economics are, but it looks like that's a little bit of rear window eclipsed by both them outperforming on the seed growth and Azure growing above. I think it was supposed to be estimates were 38 percent. It was 43 percent growth. Technically, it bounced where it should have. Five times, maybe even six since 2023. I think this is actually becoming a buy right now.
20:29Tony Wang:What do you think?
20:30Warsh:I think very good quarter for sure. So far of all of them. We got some left to go. I think the best one, it's surprising to me. And actually, it's not up more given the kind of day that we're having and the whole sort of rethinking about spend everywhere. This staying with CapEx as it is, that's a win. Given how, you know, it's had a pretty tough run. I think it actually should be up more. But today's not the day. Worst first half since 22. I mean, it's been awful. Yeah.
20:58Tony Wang:Yeah. But IGV in general has been OK. Right. And that's what's plagued them as well.
21:03Warsh:So all of that together, I would have thought it would be doing even better.
21:08Tony Wang:I mean, IGV in theory, I mean, I don't know if we still believe this narrative, you know, hardware eats software. But in a world where hyperscalers could be forced to pare back or that story slows, could that then further benefit IGV, which has already been sort of perking up of late? I mean, I don't know.
21:24Warsh:Yeah, I mean, and as Steve pointed out, I mean, the market's kind of telling you a couple of things. And they've told you that with Microsoft. And I think it has been worth nibbling. I think it continues to be worth nibbling. And I think a lot of the story, we said this even with Carter last night, kind of de-risked on the chart and the entire software space. Yeah, I mean, I think the big risk out there, I mean, chips has obviously led this year as we saw in Taiwan and Samsung and Korea, South Korea and everything else, the chip makers. I mean, all of that is on the back of massive CapEx. And if you start to see CapEx getting reeled in, if you get the year of efficiency, if you get sort of slower or even stable CapEx from some of the hyperscales, which I think we're hearing tonight with Microsoft, I'm not entirely sure that's going to be great for the chip stocks going forward.
22:09Warsh:I think the secular story is probably intact for chips. But, you know, you get some some more near term noise around that.
22:15Tony Wang:Coming up, the earnings parade continues. Qualcomm, Chipotle and Starbucks also on the move after their reports bringing the very latest from those conference calls. Plus, two health care names moving in opposite directions after their results. That's why Humana took a sick day and GE Healthcare got a clean bill of health. Straight ahead. Don't go anywhere fast when he's back in two.
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23:34Warsh:Hey, Chicagoland, the Wayfair store is in your neighborhood at Edens Plaza and Wilmette. Finally, you can feel the fabric, sit on the sectionals, and even open the refrigerators. Plus, our in-store designers will help you bring it all together with free one-on-one design support for any project on any budget. Yep, we said free. Oh, and did we mention the cafe? So what are you waiting for? Come see all that's in store. Visit the Wayfair store today at Edens Plaza in Wilmette.
24:02Tony Wang:Wayfair, every style, every home. Welcome back to Fast Money. We've got an earnings alert on Qualcomm. The chipmaker shares down after mixed results and soft guidance. Christina Parts Nevelis is here with the details. Christina.
24:15Warsh:Well, Qualcomm's core business, you mentioned it's shrinking revenue profits both following this quarter as the smartphone market. weaken, and that's the majority of their business right now, squeezed by rising memory prices that are just lifting costs across the board and cutting into demand. Handset chip sales, that's the smartphone chip sales, dropped 20 % from a year ago. CEO Cristiano Amon told me buyers are actually trading down even within the premium tier, pointing to what he called a challenging memory and supply environment. Qualcomm's answer is to pass those costs on. Prices go up across the board, September 1st, double digits, in line with peers.
24:48Warsh:That's what they just said on the call. Supply is so tight that when I asked the CFO about Apple revenue falling faster than expected next quarter, currently Q4, he told me he's happy about it because it frees up capacity to sell elsewhere. Management also saying on the earnings call right now that the Android business should more than offset that Apple loss that it came a lot sooner than expected. And Qualcomm wants investors looking past phones. The company says non-handset chip sales jump from 24 % now to more than 60 % next year, becoming the majority of its chip business for the first time.
25:21Warsh:Guys?
25:22Tony Wang:Would that be like auto and Internet of Things kind of stuff, Christina? And data centers. More specifically, remember, they signed up two big customers in China, too.
25:30Warsh:They're making custom chips. So everybody like Arm is entering the chip business, the actual tangible chip business.
25:36Tony Wang:Right. Wow. OK, Christina, thank you. Christina Parts and Nevelis, down six and a half percent, Tim.
25:42Warsh:And down 40 percent into the print. And so and this was another one of these names that got the AI euphoria around it. All they seem to be doing is trying to talk about their life after Apple. And so non-handset revs will be two thirds of their revenue by fiscal 29. Well, I mean, doesn't sound like a great run before then. It sounds like, yes, non-handsets growing 24 percent. They just noted that. It is nice to hear that they're Snapdragon 70 % of, you know, essentially Samsung devices. But, you know, I'm not that excited even after this move. I think Internet of Things and car automotive get you to around 23 % of revenues.
26:24Warsh:Still not enough to really change the spectrum for the trajectory for the stock. But on a technical level, back in May, it was straight at$250. it's probably going to get down to a level where you're cut in half before it finds some support. Cut in half from here, not from 250. From 250. So I think you have another 10 or so, maybe if it bounces before that level. But I would look for 125, 135 to be support in the stock. So you don't need to catch this knife. The chart looks gross. That's a technical term. It's terrible. It's horrendous. Ew. Ew.
26:59Tony Wang:Ew. That's what I like to say. Coming up, the fast movers on our radar today. YG Healthcare pop while Humana and P &G drop. That's next. Plus, another check on tonight's biggest tech reports. A top portfolio manager will join us straight ahead with his take on Microsoft Meta and what we have learned from earnings season so far. You're watching Fast Money Live from the NASDAQ Market Site in Times Square. Back right after this.
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28:19Tony Wang:business. CDW. Make amazing happen.
28:23Warsh:Hey, Chicagoland. The Wayfair store is in your neighborhood at Edens Plaza and Wilmette. Finally, you can feel the fabric, sit on the sectionals, and even open the refrigerators. Plus, our in-store designers will help you bring it all together with free one-on-one design support for any project on any budget. Yep, we said free. Oh, and did we mention the cafe? So what are you waiting for? Come see all that's in store. Visit the Wayfair store today at Edens Plaza and Wilmette.
28:50Tony Wang:Wayfair, every style, every home. Welcome back to Fast Money. Stocks sharply lower after today's Fed decision. The Dow losing over 1 ,100 points. The S &P down a percent and a half in the Nasdaq, dropping one and three quarters of a percent. Some names seeing big moves during the trading day. Procter & Gamble down almost 2 % after sales came in below estimates. The consumer staples giant also giving a soft outlook for its fiscal 2027. Humana sinking 6 % despite top and bottom line beats the insurer, leaving full-year guidance unchanged, falling short of investors' expectations. And GE Healthcare soaring 12 percent after topping earnings estimates and reaffirming full-year guidance.
29:26Tony Wang:And some more after earnings movers are watching. Carvana sinking after full-year guidance came in well below Wall Street expectations, now implying a relatively flat second half of the year. Arm holdings also lowered despite top and bottom line beats. A chip designer saying customer demand now exceeds$2 billion across fiscal years 2027 and 2028. Finally, Robinhood dropping even after revenues came in ahead of expectations. Crypto trading revenue is down 38 percent year over year. The CEOs of both Arm and Robinhood, by the way, will be on CNBC tomorrow. A lot of stocks there. What do you want to trade?
30:01Warsh:Yeah, I mean, I thought Procter was kind of a kind of a letdown when in this environment, if you see people trading down in staples, that's that's a problem. So you have to go hunt your best your best staple stock there. and one other one in Robinhood, they were seen as the adult in the room. They're diversified play. Better than the other crypto plays. So shocking to see the chart there and shocking to see them down. GE Healthcare. Any spawn of GE is just, I mean, not every single. This one hasn't been, though. But, I mean, very healthy and market demand. I mean, revenue growth, very good. A little PCS patient clients.
30:41Warsh:They had some supply chain issues. But a stellar quarter. I mean, there's good margins. Nicely done. Yeah, I thought that one caught my eye, too. And I have a stub of GE Health Care as part of this little basket of goodies that GE gave us when they split it up. And it's been one of the laggards. But the discussion about AI helping supply chain and AI actually being a margin enhancement is exactly what you want to hear, especially across the health care sector. So this is a this is kind of a breakout pop. And I think you follow it. The the one billion after tax impact for Procter & Gamble due to raw materials.
31:18Warsh:To me, that was a big story. You know, it's showing that these staples companies just can't pass through costs. Inflation is biting. And, you know, I'm not sure if that's really, you know, a good story going forward. I don't see that really declining. And then the other thing I'll just throw out there is, you know, the the beats and then the big down days are suggestive of something going on. And I think it's that, listen, we've been in a market that's been fueled by excess liquidity. Valuations are reasonably high. And you've got to do more than just beat now. And I think this earnings season so far, it's highlighting that for me.
31:49Tony Wang:Coming up even more in tonight's key tech earnings, Microsoft's call just getting underway. T. Rowe Price's Tony Wong will join us with his reaction to all of tonight's moves right after this break.
32:00Warsh:Missed a moment of fast? Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.
32:18Tony Wang:Taking a check on how we are doing in the after our session, MetaShare is down by about 9%, Microsoft up 2.5%. Microsoft just kicked off its call moments ago. T. Rowe Price's Tony Wong joins us now with his take on these earnings and much more. He manages the firm Science and Tech Fund. Tony, great to have you with us. You own both of these stocks. What do you make of Meta's decline here? What more does Meta need to communicate to investors to really sell the vision that they have?
32:48Warsh:Yeah, I think there's a few things. One, you know, I think that their core business needs to be remained really healthy to pay the bills. And then number two, I would say these new businesses that they're starting, whether in S &B or enterprise, in the consumer space, I think there probably is a question of where the focus is from the market and where the ROI is going to come from. And so I think there's a lot of scrutiny here, and that's how I think the market is looking at it right now.
33:15Tony Wang:Are you disappointed with Meta's earnings? Are you disappointed with what's happening on the conference call so far?
33:21Warsh:I think that if you're going to be spending at this level, you have to really execute well. You have to show accelerating top line, improving margins. And I think we're in this phase where it's like you've got to raise external capital in order to continue that. And so I think it's even more important at this level to spend that incremental capital. Hey, Tony, it's Tim. Thanks for joining us. And I guess that's where I wanted to go. I mean, at what point do you make a change in your assessment of the attractiveness of the investment based upon the balance sheet or at least the lack of free cash flow?
33:54Warsh:And as we've talked about what the costs for financing data center and CapEx are growing, is there a threshold for you where the multiple you believe this company should trade at has changed? Yeah, I mean, I think there's a lot of off-balance obligations that you're pointing out. In addition, you know, there is a good amount of, you know, depreciation coming through over the next few years, and that's going to hit earnings, right? So I think that it acts like a two-way street. If you're growing really well, you have great product fit, you show AI usage and adoption, then I think it's great to be spending.
34:34Warsh:But I think that if you're not executing well, it can go the other way and act as leverage.
34:39Tony Wang:How do you think about Meta's ability to raise capital going forward for all these projects, which don't seem to be ending at this point? There's a lot of press yesterday about, you know, their most recent offering having to go out much higher than what it offered for Hyperion just, you know, last October. So how do you think about that in the context of a rising interest rate environment, the interest expense?
35:02Warsh:Yeah, so I'd say the bulls argue, like, what's another 50 bps, right? And, you know, given how existential this is, how important it is, how, you know, the investments are long-lived, I think that's what the bulls would argue. I think what the market is becoming more concerned about is just that incremental ability to finance, right? And, you know, where this ROI, like, comes from. And when you have to convince debt holders and equity holders to do that, I think you have to be more precise and execute well than that. So, you know, I think that they're going to have to continue executing, put up numbers to celebrate, show traction in the new businesses in order to convince the market of that.
35:43Tony Wang:So what we've seen so far in earnings season, Tony, is that the companies that are raising CapEx, they're getting sold off. And your fund, the top 10 holdings are all chip stocks. They're all the beneficiaries of the spend. And so how do you think about that as it relates to those holdings that you have? And also what's going on in Korea, because part of this whole chip euphoria was the amount of leverage in the Korean system, which is now being unwound. And we don't know if it's completely unwound yet at this point.
36:14Warsh:Yeah, totally. I mean, like, you know, I kind of grew up in 70s as an analyst. So you always have to remember that there's always cycles, right? So you have to constantly be risk managing, assessing the new data points. And, you know, I think that the market is trying to figure out, like, what the growth is from 27 to 28. And I think that part of that is going to be the ROI, the utilization of the cloud, and then also sustainability of the spend, right? So I think it's trying to put together all those pieces. And it's not just about near term earnings, you know, and it's more about the view of like what the next 12 to 24 months looks like.
36:49Warsh:And you have to go to like kind of the capital spenders and the customers to evaluate that health.
36:54Tony Wang:So now that you see that the people or the companies that are selling, I mean, that are, excuse me, buying stuff are getting sold off and there's inherent pressure on that narrative. How do you then think about the chips? I mean, are you getting concerned that that that's turning? The story is turning?
37:12Warsh:Well, I think you always have to be humble, right? When the market is telling you something, you know, at the same time, you know, you look at like what the other areas of innovation and AI are. And I think that if you go to this multi-agentic world where you can string a team of agents together, you know, what Anthropic has been talking about, Country of Geniuses, you know, Codex by, you know, OpenAI. like their traction is really important, I think, to accelerate this growth and keep that intensity going. And I think that also can uncap the usage. At the same time, you're also seeing a lot of increasing costs, whether it's in the construction of it, the cost to borrow, other parts of the supply chain.
37:52Warsh:And so I think that's pressuring it in terms of how much incremental capex you can raise. So I think you've got to put it all together and look at it from a secular perspective and then also a cyclical one, too.
38:03Tony Wang:All right. Tony, thanks. Great to get your thoughts. Tony Wong of T. Rowe Price. When you put it all together and shake it all up, Michael, what do you get?
38:13Warsh:I mean, listen, you can't let the secular get in the way of the cyclical. And at the end of the day, what drives the cycle are earnings. You know, we recently produced a chart that showed all earnings growers of greater than, expected earnings growers of greater than 25 percent in the All Country World Index. So long-term earnings growth, expected earnings growth of greater than 25 % of the All-Country World Index. Guess how many MAG 7 were on that list? Zero. One. Nvidia. So there's about 200 companies in the All-Country World Index with expected earnings growth of 25 % or more and one MAG 7.
38:46Warsh:So when we're talking about the cycle, I would say the cycle is favoring a lot of other stocks other than the MAG 7. The other thing I'll just quickly know is these companies are becoming E &P companies. I know I've said that before on this on this set, but they have just like E &P companies who have to drill, drill, drill. Right. And keep getting new wells. These guys have to keep building, building, building and spending, spending, spending in order to to drive business.
39:07Tony Wang:Coming up, a double portion of restaurant earnings. Starbucks and Chipotle both on the move after the results. We are digging into all the numbers when Fast Money returns.
39:22Tony Wang:Welcome back to Fast Money Earnings Alert on Chipotle and Starbucks. Both stocks climbing after beating estimates. Brandon Gomez has got the details on this. Brandon.
39:30Warsh:Hey there, Melissa. Yeah, let me dive into the earnings call highlights. Chipotle beyond the beat and same-store sales growth also announcing a new share repurchase at$1.3 billion. That's part of the$1.7 billion Chipotle had available for share buybacks at the end of Q2. Cyclospora mentioned briefly CEO Scott Boatwright saying we're not involved in that they source lettuce in California. A Starbucks also popping higher. The company saying customers are still spending across income group and age. Pricing contributing less than one percentage point of ticket growth, suggesting most of the comp increase came from higher traffic.
40:01Warsh:Now, raised guidance detailed, too, on the call, citing stronger sales momentum and improving margins. You can see the numbers detailed here. Starbucks CFO saying tariff refunds received in Q3 offset largely. tariffs incurred in the first three quarters of fiscal 2026. Brian Nickel calling the turnarounds, quote, ahead of schedule, guys.
40:19Tony Wang:Yeah, Brandon, in terms of the comments on cyclospora from CMG, I mean, was it that brief that he just said our lettuce comes from California because we don't actually know right now what the source of the outbreak is? And if it's the water, then it could be wider spread.
40:37Warsh:Right. Could we find out down the road that perhaps some of the California sourced lettuce is, in fact part of the contaminant, right? Well, we'll see what the numbers and impact looks like as the investigation goes on, but also as we get more information in terms of where and when this was all sourced. We get more earnings commentary from Yum! Brands tomorrow morning as well, obviously them at the heart of it with Taco Bell.
40:57Tony Wang:Yep. Brandon, thanks. Brandon Gomez.
41:00Warsh:Thanks.
41:00Tony Wang:You know, we haven't said this all afternoon with Chipotle being up 6%.
41:05Warsh:Oh, I thought you were going to call it a burrito blowout. It's a burrito blowout. So you were going to call. That's where I was going. I mean, it's like a tradition. It's like every quarter we have to say that. Yeah, and also interesting that we've paired these two companies up. Obviously, the guy that used to run CMJ is now running Starbucks. And I'll talk about Starbucks because I think those same-store sales are fantastic. I mean, those are really exciting, especially for a company that was running into a wall. And we certainly were concerned about some of their input costs. Their foray into energy drinks or energy beverages is something, I mean, I always thought that's what coffee was.
41:41Warsh:But, I mean, they're really pushing it. So, I mean, I think the marketing angle has worked. I think the operational efficiencies are still to be proven. But this growth is no disputing that brand.
41:52Tony Wang:I mean, global Samster sales up 7.9%. 9%. Yeah. And North America up 8.1 % versus estimates of 6.3%. So that is a blowout on those numbers. I mean, it's not like they're not a mature company. Maybe you'd see earning that kind of growth, but obviously they are. That's an incredible turnaround. Yeah, maybe not a surprise to you, Michael.
42:13Warsh:No, I was just checking Sunshine Coffee Roaster sales.
42:16Tony Wang:I heard that's a really hot coffee.
42:18Warsh:They're up 9 % year over year, so that's not so bad. You know, listen, the consumer is reasonably strong, and the economy is doing well. Coffee prices are down. It's not a surprise they're doing well, so I think this makes sense. So when you look at the comparison, Starbucks and CMG, since nickel took over, Starbucks is up 60 percent. CMG is down 35 percent. Starbucks has went from a turnaround story to an execution story. Still have a little more room to do in margins, but I'd still much rather buy Starbucks.
42:50Tony Wang:Coming up, South Korea stumbles a memory meltdown driving the latest pullback. But could the weakness be a buying opportunity? We'll debate that. More Fast Money in two.
43:11Tony Wang:Welcome back to Fast Money. Concerns over the AI trade sparking a sell-off in South Korea. It's KOSPI dropping 6%, hitting its lowest level since April. The loss is coming after chipmaker SK Hynix failed to meet expectations for the latest quarter, even though profit came in at a record. KOSPI traded shares plunging almost 10%, down 23 % in the past week. Are we going to look back and say, Tim, that this is a buying opportunity?
43:35Warsh:Well, Samsung reports Thursday. And I just kind of feel like, you know, if I'm the Cosby, I started this thing, I'm going to finish it. And I mean on the bottom. And I do think that the leverage you referred to has created distorted moves. We know there was distorted moves, period. And I'm not telling you that the things that are driving the trade lower, which is the market is telling you there won't be that much demand. There will be a pullback. The world is commoditized, and it's very cyclical. I think we're getting to a very interesting place to own real companies, not necessarily with all due respect to Seagate.
44:14Warsh:They're a real company, but I'm not talking about a memory move that was 1 ,000%. I'm talking about, and I am talking about Samsung, which is very cheap, and I think SK is ownable too. I do think you could trade off lower, again, because it's overdone. And if you want to equate semis to the SMH, I think 420 on the SMH is still a ways lower. But, yeah, I think this is a moment.
44:36Tony Wang:But to the extent that leverage on the part of the Korean investor created the frenzy to the upside, and now there are all sorts of curves on that leverage, will we never see those levels again? It seems like we won't, at least in the near term. I mean, that that bounce when you think about a bounce, it's not a bounce back to those highs because that froth in the system won't exist.
44:58Warsh:And that's fine. I mean, at some point, let them grow into that. But I mean, Samsung is going to report 19 fold profits year over year for 2Q. I mean, I just and by the way, Samsung's not a one trick pony. I mean, Samsung isn't just a chip manufacturer. So, I mean, I think there's there's an opportunity. We're overweight emerging markets ex-China. So by nature, we're overweight the chip stocks. And this has been a bit painful, but it's also had a massive run up. I mean, still up huge on the year. And most of our sentiment indicators are saying that this is overdone. It doesn't mean it couldn't go lower before it does bounce and fundamentals start to take over again.
45:33Warsh:But, you know, I think it could be a little bit more pain before you start to rally again. To your point, the mechanical selling really cuts both ways. So if you're limiting your upside, you're capping it. You put curbs on both ways. and mechanical selling begets organic selling, which begets more mechanical selling. So you have to sort of wait till it gets through the cycle. I would hold back. It is a buy. It is a great company. But I would wait until this mechanical selling peters out.
45:57Tony Wang:Up next, final trades.
46:11Tony Wang:Time for the final trade. Michael Katopoulos.
46:13Warsh:We like China. Earnings growth is accelerating. We think policy support is going to be there, and it's pretty cheap. So China it is. Kimbo? I like Michael's view on China. I like bros. Of course you do. How are you doing? Bros going higher, and I think the trends here that we just heard about are in favor for them.
46:30Tony Wang:Karen? Yes. The mix right here. I don't think it lives here. I think it actually goes higher. It's quite a day today before it goes lower. Steven?
46:38Warsh:Mine is Microsoft, and I do believe it should have been trading higher. It's sort of given a little bit back. It's only up about 2%, but I think it should be higher.
46:45Tony Wang:All right. Thank you for watching Fast Money. See you back here tomorrow at 5. Mad Money to McCrane Resorts right now.
47:12Warsh:reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money Disclaimer, please visit cnbc.com forward slash Fast Money Disclaimer. Hey, Chicagoland, the Wayfair store is in your neighborhood at Edens Plaza and Wilmette. Finally, you can feel the fabric, sit on the sectionals, and even open the refrigerators. Plus, our in-store designers will help you bring it all together with free one-on-one design support for any project on any budget. Yep, we said free. Oh, and did we mention the cafe?
47:44Warsh:So what are you waiting for? Come see all that's in store. Visit the Wayfair store today at Edens Plaza in Wilmette.
47:51Tony Wang:Wayfair, every style, every home.
From the publisher
The traders monitoring after-the-bell mega cap earnings like Meta, Microsoft and Qualcomm. Live reactions to the reports and what they mean for the tech market in the second half. Co-head of technology and portfolio manager at T. Rowe Price Tony Wang talks all things tech and where he thinks the best trades are in that market.Then, the Fed keeping interest rates at 3.5-3.75%. All the details from today’s FOMC meeting and why Fed Chairman Warsh is praising the surge in high tech capex. Plus, earnings results from Starbucks, SK Hynix and more.
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